Thursday, December 18, 2014

How this all ends

Assuming we don't blow through overhead resistance and head for the stars, I'm still willing to entertain equity market-apocalypse here.  Keep an eye out for the 12/26 Bradley turn, could be a real doozy.

My SPY calls are up 300% so far, but I think they can be true 30-baggers.  Will let them ride.

Merry Christmas, enjoy the rally.

when the S&P finally dies

Wednesday, December 17, 2014

A bullish count and 2100 SPX are still possible

We have a legitimate 5-wave move off the market highs, with no pesky gaps in the tape that we need to fill, but the bear case is still open to the objection that these waves are not impulsive in form, not yet, at any rate.

We didn't see the more violent breakdown in the markets I thought we could.  Even with the excitement yesterday, we ended up drawing a five-wave decline that fits into a nice, tidy channel.

Here's a bullish count that puts 2100 SPX back on the board.  The still-untouched upper Bollinger Band on the SPX is up there now, taunting us.

SPX 12-16

Is Putin going to respond after Christmas?  The Western banking syndicate sorely needs more assets to financialize and securitize, in order to keep the great game going, and a major store of unburdened assets in the world is the great expanse of Russia.

Western finance could maybe squeeze another 10 years of life out of the Russian north, enough to get us through a good pod of Boomers.  The shark has to keep moving to live.

I'm excited to see what the statesman Putin has in mind as a response to our attacks.

Monday, December 15, 2014

Pay attention to the tape

from the Thirty Years War

Pay attention to the tape -- we're at a very important juncture here.  Not only did we turn down hard on an intraday rejection of the top of the megaphone since July, but the everything since the top has been very deliberate -- and free of gaps.  Did you notice today that the drop to 1982 was a perfect fib 1.62 times the first leg off the top?

We're setting up for much larger moves in 2015.  First, looking for us to wrap up the wave count with a 1954-ish low into FOMC this week, and a bounce into Christmas.

SPX 12-15

The larger count to return us to the 1080 SPX area over Spring, with 3PDH labeling:

SPX 12-15 3PDH

And a quick look at UVXY, which was instrumental in identifying the significance of our rejecting the old megaphone upper trendline.

UVXY 12-15
GLTA ...

Thursday, December 11, 2014

Good shot at a 4% sell-off tomorrow


Volatility spiked today after we rejected off the underside of the old megaphone going back to early July.  Tomorrow could see a 20+ handle gap down and flush.  The vols really were the tell today.

I do hope this is truly, finally, at long last the return of the Bear, because these moves would line up well with a real crash off the January FOMC.

SPX 12-11

Sunday, December 7, 2014

Season's Greetings and Bollinger update

Christmas in Deflation Land

It's the holiday season here in the PNW (and probably where you are, too), but the jury is still out whether we have a new bear market on deck.  We got our "one more higher high" per Bryan's model of serial highs going into historical tops, and now we are sitting up at the top of a parabolic move with no significant corrections.  Commodities and shit speculative credit ("high-yield") are in decline, and it's high time for the indexes to take a dive.

Let's take a quick review of where we are with respect to the Bollinger Bands on the various indexes.  At the moment, the S&P 500 is our lone holdout -- its upper BB was at 2084 SPX on Friday.  A few comments on the charts.


Blog regular and upright Illinois citizen Bicycle has been engaging heavily in fantasy bearishness lately, drawing trendlines to zero and other such nonsense.  OK, I'll play. 

Here's my take on the chart to OMG zero which includes my interpretation of Martin Armstrong's 2015.75 date for style points as well as shits & giggles.  Also, it's got fibs!  Eat that, Bicycle.

SPX chart to ZERO (hint: your brokerage is broke)

Tuesday, December 2, 2014

It's December and the Bollingers are in sight at last

the empty suit

I took a couple of weeks off to let the blown-out Bollinger Bands come in from their reaches, before we get back to the important and pressing business of calling tops in equities.

Besides the larger patterns, the key detail for us here is that we reach these extremes and react against them with great force.  The danger is that we do not, and instead follow them up for a while.  Take a look at some of the 3x leveraged ETF charts, and you can see long runs of this -- a very dangerous trap.

But it does open up some fun chaos into the end of the year and then the January FOMC.  We first need to see a key reversal day, say this Thursday, where the SPX swings 30 or 40 handles, with UVXY rising 20% or more.

Christmas crash scenario again

The VIX threw a pin through its lower (oversold) BB but has not reacted yet.  Ideally, it can close outside the band and then back inside, for a "VIX buy" (index sell) sign.

VIX daily 12-02

Friday, November 14, 2014

Nothingburger week

Like I said before market open Tuesday morning, we're just marking time up here, waiting for the Bollingers on the daily SPX, VIX, and vol ETFs to come in and give us something to push against.  Pull up any daily chart with a BB overlay, and you'll see them tightening up from above and below.

For a brief moment this week I wondered if we might pop up over the top of the megaphone to the 2080s SPX, but it held.  Bears then got their only real play this week, 16 handles from 2046 back to 2030, but only if they were smart enough to exit.  Puts held since then are bleeding theta daily.

See you next week, hopefully for a violent reaction off 2050 SPX.

FEMA Camp Sol Duc (ONP)
North Cascades bivy at 7600'

Tuesday, November 11, 2014

Bollingers have got to come in

IMO, no lasting top possible here until the 2SD Bollinger Bands on the dailies come in quite a ways.

Eeek -- the lower BB for UVXY now has a 15-handle, although this one, too, ought to come in a little.  Careful with this one -- she's a man-eater!

Re the 11/20 "major" Bradley turn, please note that the FOMC minutes go out just the day before, and that that Thursday is a huge data-dump day.  Oh, Bradleys are voodoo?  Yeah, probably, but the last one was a direct hit -- October 16th.

SPX 11-10
VIX 11-10

Thursday, November 6, 2014

SPX almost there

The S&P 500 is now a short distance from tagging the top of its broadening-top megaphone at 2040 to 2042 SPX.  This would be a great place to close tomorrow, before a plunge to 1750.  A wave 1-2 combination into November opex would still eat most of the bearish SPY puts from 195 on down.  And after opex, well, the hedges are off, aren't they?

SPX 11-06

The Dow has already exceeded the upper bound of its megaphone.

DJIA 11-06

UVXY is showing a bullish wedge nearing completion.

UVXY 11-06

While the McClellan Oscillator had another tiny change today, telling us that pressure is building here.

McClellan 11-06

Things about to get exciting again soon?

Tuesday, November 4, 2014

Charts 11-04: Fear off again

I actually began the day all loaded-up short in case we reversed and crumbled, but I exited everything nicely when I noticed that UVXY wasn't too worried about the early tape.  What a fantastic ETF, what a great barometer for fear or, today, for market complacency.

UVXY flipped red today while the S&P 500 was still negative 5 or 6 pts, a sure sign that we were not about to break down.  No, not yet.

Looking ahead to the 11/20 Bradley turn window to finish up the megaphone.  It looks about right.  Take a look at the November options open-interest for puts on the SPY; there are huge piles of Novembers outstanding that this market wants to eat up.  The options sellers will need the money from these profits soon enough.

SPX 11-04

A December 26th Bradley turn date suggests an EOY sell-off that gets out of hand.  It could even mean impeachment hearings for our fake POTUS.  Remember, all we need is for some disgruntled former supporter of this guy to leak old financial-aid papers from Columbia out to the Press, and we may find ourselves in a full-blown Constitutional crisis overnight.

Congrats to the Republicans.  It won't make any difference with respect to the long-term credit cycle (Kondratieff waves) and the end of the 20th Century, but it will at least piss off a lot of liberals and the FSA in this country.  And that's something worth celebrating.

Monday, November 3, 2014

The danger is real

All we have to do is pick up where we left off on the selling ... and we will live in a whole new world by January FOMC next year.

It has the potential to move much faster than anyone but the most irresponsible, glue-sniffing Austrian bears like me can imagine.

SPX 11/03

BTW, I love Hussman's ballsy call for 85 on USDJPY.  Now that is the contrarian outlook of the hour.  

Thursday, October 30, 2014

The Christmas Crash Scenario

When he's not scoping out moldy old sci-fi in the local Goodwill, the modern Elliotician spends most of his time war-gaming various scenarios, some of them extreme, about the future.

It's a little like those great old Avalon-Hill games we played as kids on the giant hex maps where the Soviets were pushing through the Ruhr Valley with the Czech mechanized units, and, well, could you counter it conventionally, or does it need to go nuclear?

If we can make it to the top of the megaphone -- an insane 2040 SPX -- by, say, Monday, then I can get us a crash by Christmas.  It would be triggered by a rejection off the underside of the 200 DMA, and then ... nothing but air for 700 handles ... a true historic panic.

So here it is, mechanized units thrusting into the Ruhr.

SPX - Christmas Crash scenario

But we gotta finish the rally and -- hopefully -- make our new highs first.  Bicycle is worried about us hanging around up here for a while like a bad canker sore, and so am I.  We are bold men of action, eager for the future!

Wednesday, October 29, 2014

Charts 10-28: Speculation on the future

After a week of watching this meteoric squeeze, which puts Bryan's idea of new all-time highs very much back on he table, it's time to throw up a pile of speculative chart rubbish to match.  The gibbons at the Lincoln Park Zoo in Chicago really do try to defecate on visitors, all day long.  Please allow for plenty of room between you and their enclosure.

First, let's take a look at the VIX, whose breakdown through an important support yesterday supports the idea that this will continue in the short-term.  Next support is down in the 12s.

VIX 10-28

VIX dropping back to the 12s would power us to new highs, per the channel we have carved out since the 1820 lows.  2038 SPX marks the top of a megaphone-like trendline coming over from the previous highs.

SPX 10-28

After this presumed top, crash models are very much back in play.  An important deflationista theme is that when things do finally start to move, they will move so fast that everyone who is still playing by the old rules will miss it.  So even bearish shorts will cover too early because some responsible technical indicator told them to do so, and they get to sit and watch the rest of the crash play out.

SPX 10-28 6M crash

Deflation.  What you imagine is money is not, and it is a lot less liquid than you think.

The hour is late.

Sunday, October 19, 2014

Eerie similarity between the 2007 top and now

Posting this chart again, just to drive the point home.

A false break of the 200 DMA, followed by one last high ...

2007 top and today

My daughter and I saw two river otters out in Puget Sound on our walk this morning.  Then I went completely Hobbesian on a couple of Seattle idiots whose filthy unleashed dogs came over to visit us.

"Oh, but they're nice dogs."

And yet I will kill your dog if it bites my kid.  Right here on the beach.

This sort of primordial psychotic intensity scares the living hell out of your average passive-aggressive New York Times-home-delivery wussy Seattle people.  It's great fun, it should be a sport, really.

Saturday, October 18, 2014

Charts 10-17: Breakout ahead

But which way?

Friday's tape and close left us just about where I thought it would the other day.

You can see it even better in the trendlines on this chart.  What a meat-grinder.  One of them has to break.

SPX 10-17

I think new highs are possible if the bulls can spark a short-covering panic brushfire this week, starting with a taste of trading above 1900 SPX.

This isn't his call, but this week we tripped one of Dr. Bob McHugh's favorite tactical technical signals, the "VIX buy" signal.  This is where the VIX closes outside of its 2SD Bollinger Band, and then back inside, indicating a "buy" across all of the indices.

We shall see ... we shall see ...

Edit: chart for Permabear Doomster, our man in the London.


Actually, I think this last chart should give any short-term bear some serious pause.  Whoa!

Thursday, October 16, 2014

Got C?

Stackin' C

Charts 10/16: All-time highs are still possible

First we have to get back to the revised channel edge at SPX 1895 into opex tomorrow.  Very possible.

There we face a hard choice --

1. We can either crash again next week to support at 1740 SPX

2. We can gap out of the pink channel and make it up to 2050 SPX into October FOMC

The leg from 1970 to 1820 was precisely 1.618x the 93pt leg down off the September highs.  But do we count this series as 1-2-3 or A-B-C?

BTW, if the lower leg wins out, that pink lower trendline takes us all the way back to the 1040 SPX area by January opex FOMC.  It would mean that pulling QE simply returns us back to where we started.

Short-term S&P 500 doodles

Wednesday, October 15, 2014

Charts 10-15: To the bear trendline

Updated count.

If it's on, we are finished trading above 1900 SPX in this monetary regime.

SPX 10-15 a.m.

Added: the "eat everyone's theta" count:

wave 4 eater of option theta

Friday, October 10, 2014

How the market can reach 1233 SPX by the end of January

The bear trendline for this drop is already in place.  Surely it is the end of days!

I don't know if we'll put in a new low under 1925 SPX this morning, but I'd like to see us close the week at 1948.  This will clear the table of the 195 SPY puts I should have held on to ... grrr ... oh well, plenty of good trades ahead.

A lower trendline from the waves already in place takes us to 1233 SPX by the end of January.  The Fed will accomodate, you better betcha, and we will bounce 300 handles back up (.382 retrace) into the Spring.

But first for the crash call.  Big picture with the bear trendline and surprise support from a triangle from 2011.

SPX 10-09 4Y

It starts this fall with a series of breathtaking drops to key support levels: 1814, 1737, 1560.  The crash leg in January kicks off right after Christmas on the 12/26 Bradley turn, as everyone tries to secure year-end profits.  This quickly gets out of hand!  ONOZ OMG ...

Bounces are typically .382 of a previous larger leg, and they also correspond to corrections we experienced on the way up this thing.  Yes, these are all 3PDH numbers as well, you know the drill.

SPX 10-09 6M

Short-term -- I'd like to see that close at SPX 1948 today.  We can make it as high as 1962 into Monday if there is a B-wave triangle playing out here.

The question re the drop from 2019 to 1926, whether it counts as a 5-wave impulse or not, is moot.  Call it "A" and be done with it.

SPX 10-09

First important support is at 1814 SPX just after October opex.

Wednesday, October 8, 2014

It's time for a book thread

Schizoid market, but it looks now like we may get that new high after all, after which the waves will tell us if it is the ultimate one.  We will pray this can end quickly with a sharp spike instead of weeks trapped in some tedious ending-diagonal pattern.  Let's give Bryan Franco credit for now for his historical model that demands one more all-time high for the chart gods to be satisfied.

So what's new on the bookshelf?

Well, I found this 1956 Mencken collection at the Ballard Goodwill.

H.L. Mencken, A Carnival of Buncombe, Johns Hopkins 1956

And A. N. Wilson's book on the decline of Britain, at Value Village.

A.N. Wilson, After the Victorians: The Decline of Britain
in the World
, FSG 2005

I've been picking up solid book club science fiction published by Nelson Doubleday, like these.

Harry Harrison, The Adventures of the Stainless Steel Rat, et al,
Nelson Doubleday, early 1980s

Anthony Boucher, ed., A Treasury of Great Science Fiction,
Nelson Doubleday, 1959

I'll buy Nelson Doubleday sci-fi books all day long.

Mark Anderson's shop in Ballard is now my favorite bookshop in Seattle.  If you're in the area, stop in on a Saturday and spend some time in his stacks.  Here's what I have got from him lately.

J.R.R. Tolkien, Rings trilogy, Houghton-Mifflin, 1965 revised ed

I upgraded my old boxed set of Tolkien to one with dust jackets -- for $45.  Such a deal on the set!

Immanuel Velikovsky, Worlds In Collision, Macmillan, 1950 1st ed

Velikovsky is crackpot science, but it holds a special place in my heart due to the 1978 release of "Invasion of the Body Snatchers", one of my favorite cult films.

I also picked this up from Anderson's, Naipaul's account of his first visit to India.

V.S. Naipal, An Area of Darkness, Reprint Society London, 1966

This will go well with this other Naipaul I found at the Value Village over on Lake City Way in Seattle:

V.S. Naipaul, India: A Million Mutinies Now (signed), Viking 1990

This one is signed, from 1991, and worth at least $50.  Who gives a signed book away?

Here's another signed book, James Howard Kunstler's latest from the World Made By Hand series.  I've been a real putz not to get to this just yet.  Soon, very soon.  The story may go well with Kondratieff winter.

James Howard Kunstler, A History of the Future (signed),
Atlantic Monthly Press 2014

A book from my local Value Village.  All you need to know about the French existentialists is that Sartre was a salon commie piece of shit, and that Camus was the real deal, and a very good guy.

Olivier Todd, Albert Camus: A Life, Knopf 1997

A clean, crisp edition of a Northwest mountaineering bible:

Manning ed, Mountaineering: The Freedom of the Hills,
Mountaineers Press, 1967 2nd ed

I wanted my daughter to read "To Build A Fire", so I picked up this fine edition of Jack London from last week.  I wish more books were published with such care as this.

Jack London, The Bodley Head Jack London, Bodley Head, 1968

When she's a little older, I'll get her into Fritz Leiber.  Stacks of paperbacks will help.

Fritz Leiber assorted paperbacks, hells yeah!

And here are a few books from Robert D. Kaplan.  I really like his work, and have just about all of his books.

Robert D. Kaplan miscellany

Of course, this has all been leading up to something, a very special book I found, heavily discounted, from the closing sale at Wessel & Lieberman Books (R.I.P.) in Pioneer Square, Seattle.  I walked out with one of their gems, on the relative-cheap.

J.H. Speke, Journal of the Discovery of the Source of the Nile,
William Blackwood & Sons, 1864 2nd ed
Speke, Source of the Nile

A fine copy of a rare book, and one actually worth reading.  Now I just need to get more and better Sir Richard Burton to match.

Anderson's Books has even got a set of Captain Cook's journals, pretty badass, and waaaay too rich for this collector.

It looks like I'll have plenty to keep me busy when the fall rains arrive.